Foxconn has withdrawn from a $19.5 billion (approx. Rs. 1,61,133 crore) semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta, it said on Monday in a setback to Prime Minister Narendra Modi’s chipmaking plans for India.
The world’s largest contract electronics maker, Foxconn and Vedanta sign a pact in 2022 to set up semiconductor and display production plants in PM Modi’s home state of Gujarat.
Foxconn statement said without elaborating on the reasons :
“Foxconn has determined it will not move forward on the joint venture with Vedanta,”.
The Foxconn said it had work with Vedanta for more than a year to bring “a great semiconductor idea to reality“, but they had mutually decide to end the joint venture and it will remove its name from an entity that is now fully own by Vedanta.
Vedanta and India’s IT ministry did not reply immediately to requests for comment.
PM Narendra Modi has made chipmaking a top priority for India’s economic strategy in pursuit of a “new era” in electronics manufacturing and Foxconn’s move represents a blow to his ambitions of luring foreign investors to make chips locally for the first time.
Neil Shah, Vice President of research at Counterpoint said :
“This deal falling through is definitely a setback for the ‘Make in India’ push,”
He said that it also does not reflect well on Vedanta and “raises eyebrows and doubts for other companies”.
Foxconn is best known for assembling iPhone models and other Apple products but in recent years it has been expanding into chips to diversify its business.
Most of the world’s chip output is limit to a few countries, such as Taiwan, with India a late entrant.
The Vedanta-Foxconn venture announce its chipmaking plans in Gujarat in September 2022, with PM Modi calling the project “an important step” in boosting India’s chipmaking ambitions.
But his plan had been slow to take off.
Among problems encounter by the Vedanta-Foxconn project were deadlock talks to involve European chipmaker STMicroelectronics as a tech partner, as per reports.
And Vedanta-Foxconn manage to get STMicro on board for licensing technology, India’s government had made clear it want the European company to have more “skin in the game”, such as a stake in the partnership.
STMicro was not keen on that and the talks remain in limbo, as per source.
Indian government has said it remains confident of attracting investors for chipmaking.
Micron last month said it will invest up to $825 million (approx. Rs. 6,816 crore) in a chip testing and packaging unit, not for manufacturing.
With support from India’s federal government and the state of Gujarat, the total investment will be $2.75 billion (approx. Rs. 22,721 crore).
India, which expects its semiconductor market to be worth $63 billion (approx. Rs. 5,20,522 crore) by 2026, in 2022 receive three applications to set up plants under a $10 billion (approx. Rs. 82,622 crore) incentive scheme.
These were from the Vedanta-Foxconn joint venture, Singapore-based IGSS Ventures and global consortium ISMC, which counts Tower Semiconductor as a tech partner.
The $3 billion (approx. Rs. 24,786 crore) ISMC project has stall, too, owing to Tower being acquire by Intel, while another $3 billion plan by IGSS was also halt because the company wanted to re-submit its application.
